Globalization Partners is a leading global Employer of Record (EOR) offering one of the industry’s most renowned service suites. Those services have one goal in mind — let your organization grow without the burden of borders by identifying and then retaining international talent that’ll help you flourish.
What is a Global Employer of Record?
A global EOR is an outsourced back-office administrator for companies with international employees. In short, Employers of Record place their clients’ international staff on their own global EOR payroll. In doing so, the business no longer needs to undertake the long, complex, and financially onerous task of setting up a subsidiary within their international employees’ countries, instead using the infrastructure and established payroll resources of their Employer of Record partner.
The expanding company is still the functioning employer and the one all international staff report to. The EOR executes back-office payroll, benefits, and regulatory technicalities associated with international staffing. They can also provide other auxiliary HR duties the original organization doesn’t have the resources, bandwidth, or technical expertise to tackle themselves.
Employer of Record Company Types
There are two types of Employer of Record companies: companies using a consolidator, or aggregator model, and companies using a wholly owned infrastructure model.
- Aggregator model: One company serves as the umbrella organization and sub-contracts employment to providers in each country. These (usually small) providers are not built to scale, and there is a high risk of them not having the legal, tax, and HR know-how required for a public multinational company that is outsourcing its global legal infrastructure to a third party.
- Wholly owned infrastructure model: One company owns the entire infrastructure in each country and employs professionals on their own entities for their customers.
Partnering with the right Employer of Record will help unlock the full international potential of your company.
But do not fall into the trap of believing any of the following myths about how an EOR works. Otherwise, you may miss out on harnessing all of its potential benefits.
3 myths about how an Employer of Record works
Myth #1: Partnering with an EOR is the same as outsourcing.
Fact: Hiring through an Employer of Record is not outsourcing. While the EOR serves as the legal employer, your company makes all hiring and termination decisions and maintains full day-to-day control over the employee’s activities.
Outsourcing involves the farming of job functions through a third party. The outsourcing model has developed a bad name because it can sometimes be hard for professionals to know who is employing them, and essential instructions could be lost in translation.
Also, outsourcing is commonly associated with the reduction of quality control and security risks, as delicate intellectual property or consumer data could be mishandled by freelancers or contractors.
Due to the sometimes-murky employment terms and the lack of security and comprehensive benefits that come with full-time employment, highly skilled professionals may try to stay away from outsourcing employment models.
In comparison to outsourcing, an EOR offers several benefits:
- Control: With an EOR, you find the candidates, hire them, and then the EOR adds them to a legally compliant payroll. You maintain management, and you are the only one that can choose when to onboard them and, if necessary, terminate them.
- Transparency: When you partner with a reputable EOR, you and your employees will have a clear understanding of the terms of employment, as well as of the overall relationship between employer, employee, and EOR, all laid out in a compliant employment contract.
- Access to Talent: Highly skilled professionals are looking for competitive offers that include benefits. Through an EOR, you can offer employees competitive benefits packages that will help you attract top-tier talent.
- Intellectual Property: Can you trust your company’s intellectual property to an outsourcing agency? The answer is no. When you hire through an EOR, you can make sure that the intellectual property of your company is fully protected by compliant employment contracts.
Myth #2: An Employer of Record is just like a staffing or temp agency.
Fact: An Employer of Record is best utilized for hiring long-term employees.
A staffing agency provides companies with candidates to fill mostly temporary positions. Temp agencies in particular focus on specific industries that have a high demand for seasonal workers.
The Employer of Record model focuses on allowing companies to hire permanent full-time positions globally and across all industries.
Myth #3: You cannot use an Employer of Record for hiring executive roles.
Fact: You can use an Employer of Record to hire for all roles and positions in your company.
Many businesses are validating that working remotely permanently not only works and can increase productivity, but it can also open the opportunity of capturing talent without regard to country borders or immigration policies.
An Employer of Record allows you to offer your employees an attractive benefits package, which gives you access to top international talent. Being able to provide a competitive offer lets professionals know your company is serious about long-term engagement.